“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” – Charlie Munger, Co-founder of Berkshire Hathaway

Unprecedented volatility

Unprecedented rate hikes

Unprecedented political dysfunction

Unprecedented geopolitical risk

We are living in a period of unprecedented uncertainty.

If I hear ‘unprecedented uncertainty’ one more time, I might snap.

Everything is unprecedented if you haven’t engaged in history.

“The dead outnumber the living 14 to 1. We ignore the accumulated experience of such a huge majority of mankind at our peril.” – Niall Ferguson, Scottish historian

If one didn’t know better (or sat around watching the news all day), you would think 2024 is the scariest time to be alive. Be fearful of everything. We are living in a period of unprecedented uncertainty, or so we’re reminded seemingly every day by sensationalized headlines.

Here’s a not-so-hot take. Today is not more or less uncertain than the past.

Consider headlines of previous decades (some would argue these are much more serious than the ‘unprecedented uncertainty’ of today)…

• 1920’s The Potential Spread and Influence of Communism
• 1930’s Great Depression & Massive Job losses
• 1940’s World War II
• 1950’s Start of the Cold War & Fear of a Nuclear Attack
• 1960’s Vietnam War & Civil Rights Movement
• 1970’s Energy Crisis, Soaring Inflation, and Political Upheaval (Watergate)
• 1980’s AIDS Epidemic & Nuclear War with the Soviet Union
• 1990’s Racial Tension, Domestic Terrorism (OKC Bombing, Waco, TX), and Healthcare Reform
• 2000’s Tech Bubble, 9/11, & the Great Financial Crisis

Why do humans tend to think the present moment is unprecedented?

The present moment feels like the biggest moment ever. In hindsight, periods of dysfunction, market declines, societal change become a distant memory (or in the case of a market decline, an obvious buying opportunity).

The internet, social media, and the 24/7 news cycle has shrunk the world. In the 1980’s, a crisis in Eastern Europe would be an afterthought. In 2024, your smartphone will give you hour by hour updates of a door blowing out of a Boeing passenger plane.

More simply, humans place importance on things they see with their own eyes. A war fought 80 years ago halfway across the world doesn’t resonate the same as a presidential election happening in 2024.

How can we maintain our sanity and avoid getting sucked into the “unprecedented uncertainty” narrative?

Think independently

For example, if you share your views on a political topic and I’m able to accurately predict your views on a myriad of other unrelated issues, you’re not thinking independently.

Focus on things that matter & what you can control

Source: Sahil Bloom, Behavior Gap

The above chart is a good visual for directing focus. For example, we cannot control changes in federal tax rates or the outcome of an election. However, we can control our savings rate, building an emergency fund, and optimizing our portfolio for minimizing taxes.

Find the signal amongst a sea of noise

Most of what you see, hear, and read is a noisy distraction. Identify what matters to you & your family. Play your own game.

Prepare and position (avoid predicting)

When you know what’s coming, prepare. If you have a prospective new client meeting, you can rehearse. If you have an doctor appointment across town, you can factor in travel time so you’re not late. If you know you’re going to remodel the kitchen next year, you can save the money this year.

When you don’t know what’s coming, position. No one knows what’s going to happen with the stock market, but you can position yourself against potential loss by building a portfolio that reflects how you feel about risk. You don’t know what’s going to happen to your health, but you can strengthen your position by exercising. You don’t know when you might need your friends, but you can be in a good position to ask for their help by being the kind of friend they can count on. Being well-positioned enables anyone to come out ahead no matter what obstacles the unknown may present. (Source: Shane Parrish, The Knowledge Project)

The media wants you to feel like $%&#

Here’s a quote from our Retirement Propaganda blog published July 19,2023…

“There seems to be an epidemic of men watching hate news all day in retirement according to social media groups of retirees. Men seem to be at risk of addictive antisocial behaviors, making everyone (including themselves) miserable.”

Play the long game

Think in years, not weeks. Shunning the short-term noise eliminates much stress and poor behavior.

If all else fails, get outside

Have you ever felt worse after taking a summer’s eve walk?

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Don’t let this idea of ‘unprecedented uncertainty’ prevent you from saving, investing, starting a business, getting married, or living your best life.

The only certainty is uncertainty. Those that crave certainty are going to be frustrated and disappointed.